Minister for Economic Development, Tourism, Sport and Culture. States of Jersey ..... The in-house function will replace
Channel Islands Financial Ombudsman ANNUAL REPORT 2016 Fairness of outcome... Fairness of process…
Channel Islands Financial Ombudsman (CIFO) PO Box 114 Jersey Channel Islands JE4 9QG Jersey: 01534 748610 Guernsey: 01481 722218 International: +44 1534 748610 Facsimile: +44 1534 747629 www.ci-fo.org
[email protected]
OUR MISSION The Channel Islands Financial Ombudsman (CIFO) is independent. We support public confidence in financial services by resolving complaints when things go wrong and pointing out where things could be improved. We are easy to use and understand, and free for complainants. We do not take sides. We decide what is fair, even if that is not popular. We are open about our work. We are prompt and efficient, and seek to get better at what we do.
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Channel Islands Financial Ombudsman
TABLE OF CONTENTS Annual Report 2016
INTRODUCTION Submission Letter Message from the Chairman Message from the Principal Ombudsman
ORGANISATION Who We Are How We Work The Process
ANNUAL REVIEW 2016 Year in Review 2016 Complaint Statistics Insight Into Our Approach (case studies) Insight Into Our Approach (Investment Suitability Complaints)
3 3 4 5
7 7 8 13
14 14 18 30 36
GOVERNANCE, ACCOUNTABILITY & TRANSPARENCY
38
INTERNATIONAL ENGAGEMENT
41
APPENDICES
43
Appendix 1: 2016 Audited Financial Statements (Jersey) Appendix 2: 2016 Audited Financial Statements (Guernsey)
CONTACT
Back Cover
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Channel Islands Financial Ombudsman
SUBMISSION LETTER CHANNEL ISLANDS FINANCIAL OMBUDSMAN
Senator Lyndon Farnham Minister for Economic Development, Tourism, Sport and Culture States of Jersey Cyril Le Marquand House St Helier Jersey JE4 8UL President Peter Ferbrache Committee for Economic Development States of Guernsey Raymond Falla House PO Box 459 Longue Rue St Martin’s Guernsey GY1 6AF
Dear Minister and President As you know, the Channel Islands Financial Ombudsman is the joint operation of the Office of the Financial Services Ombudsman established by law in the Bailiwick of Guernsey and the Office of the Financial Services Ombudsman established by law in the Bailiwick of Jersey. On behalf of the Directors, I am pleased to submit the report and accounts for 2016. These take the form of a shared report accompanied by separate accounts, which include a division of overall overheads in accordance with the memorandum of understanding between you. The report and accounts are submitted under section 1(c) of Schedule 2 of the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014 and article 1(c) of Schedule 2 of the Financial Services Ombudsman (Jersey) Law 2014. Yours sincerely David Thomas, Chairman
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MESSAGE FROM THE CHAIRMAN Channel Islands Financial Ombudsman
David Thomas
A notable feature was that we received groups of complaints about a particular financial services provider (FSP), or even about a particular product from one FSP. Although some groups of complaints shared some similar features, we had to treat each one individually – dealing with separate circumstances and separate (often distressed) individuals. We kept staff and resources to a prudent minimum whilst we gained experience of the longer-term volume and pattern of complaints. So, though we coped with the greater than expected volume of complaints, some cases took longer to resolve than we had hoped and some non-casework activities had to be restricted. We have since scaled up to cope with the greater workload. As we did last year, we will be convening public annual meetings in Guernsey and in Jersey to discuss this report. This is part of our commitment to transparency and to engagement with our stakeholders and users. We surveyed users during the year, and will use their feedback to shape our staff training and improve our service.
This report from the Channel Islands Financial Ombudsman (CIFO) is for the calendar year 2016. CIFO is the joint operation of independent financial ombudsman bodies established by law in the Bailiwick of Jersey and the Bailiwick of Guernsey. The report covers the first full year since we opened for business on 16 November 2015. Financial ombudsmen have been established worldwide. But CIFO is unique in covering two separate international financial centres. This provides flexibility and economies of scale, while doubling the number of governments and stakeholders with whom we deal. We appreciate the support they have all given to us, both in setting up the office and in carrying out our work. CIFO is an independent body that supports public confidence in financial services provided in the Channel Islands, and internationally from the Channel Islands. We do this by resolving financial services complaints – fairly and impartially – as an informal alternative to the courts, and by pointing out where things could be improved for the future. We received more complaints than was expected when plans for the office were laid, more than half from customers outside the Channel Islands. But a higher proportion of complaints than expected was outside the remit given to us by the States. Some were outside the relevant time limits, but a significant number related to types of financial services excluded from our scope.
The annual statistics in this report have, of course, been foreshadowed by the quarterly statistics we published throughout the year. After discussion with our stakeholders, it was concluded that all concerned needed time to adapt to CIFO’s existence and approach and that it would not be appropriate to disclose the identity of individual FSPs in relation to cases determined before 1 January 2018. Looking ahead, around November 2017 my board will stand back and review how things have gone in the two years since the office opened for business – with a view to refreshing our strategy for the future in the light of experience. We will be delighted to hear from any of our stakeholders about things they would like us to consider as part of that review. A definite item on the agenda is a review of the funding formula, by which the cost of CIFO is raised from FSPs. The existing arrangements run until the end of 2018. But the complexity of devising an arrangement that will be both fair and practicable from 2019 onwards is such that we are starting a programme of focused discussions with stakeholders during 2017. In conclusion, I am grateful to the other members of my board for their commitment, support, and wise counsel. They and I join in thanking the principal ombudsman and all the members of his staff for their hard work in meeting the dual challenge of getting the office successfully established and in handling the volume of complaints that emerged. 4
Channel Islands Financial Ombudsman
MESSAGE FROM THE PRINCIPAL OMBUDSMAN & CHIEF EXECUTIVE Douglas Melville
and the general public, or referral of complainants to our office, all of these activities contributed to this new mandate. While we are independent in terms of our decisions on complaints, our frequent contact with both governments and regulators in Guernsey and Jersey helped us to refine our approach to the mandate and lay the structural foundation for our future success. Bodies like the Jersey Consumer Council, Citizens Advice Bureaus on both islands, and Trading Standards have helped to signpost Channel Island consumers to our office and have also helped CIFO staff to appreciate the consumer perspective of challenges encountered with financial services.
What a difference a year makes. The Channel Islands Financial Ombudsman (CIFO) celebrated its first anniversary on 16 November 2016 and completed its first full calendar year of operation on 31 December. For any new endeavour, these are milestones to be celebrated, but they represent only the first steps in a much longer journey for this unique mandate. Establishing a new public interest mandate, building an office and forming a team is challenging under any circumstances. This is compounded when the initiative is pan-island in nature, working across two jurisdictions and engaging with two of everything from a stakeholder perspective: governments, regulators, industries, media, and consumer and community contacts. It required a great deal of commitment and assistance from all stakeholders across the Channel Islands. This is what we celebrate, and for which we wish to express our appreciation. We are very gratified to have received such strong support from all stakeholders during our first year of operation. Whether in form of engagement to better understand our mandate and how we function, sharing of information about CIFO to inform industry 5
As with any new endeavour, the creation of CIFO has not been without its challenges. Complaint volumes during 2016 were nearly double the volume estimated during the pre-launch planning of the office. This was partially off-set by the high proportion of complaints during our first year that fell outside the remit set by the States. Some (as expected) fell outside the statutory time limits and others (rather more than expected) related to types of financial services excluded from our remit. As time passes, we expect to see the nature of complaints settle into a regular pattern of volumes and themes. We have provided a robust analysis of our complaint volumes for 2016 in this report. The fact that so many consumers brought their complaints to our office during our first year is a positive reflection on both the mandate and the need for an alternative to the courts in seeking redress for losses incurred. The creation of CIFO was greatly assisted through initial funding from the States of Guernsey and States of Jersey in the form of lines of credit. These were both fully repaid in early 2016 once CIFO had well established the process for raising annual levies. The patience of industry stakeholders was greatly appreciated while the intricacies of available regulator data and the underlying business activities of financial service providers were navigated to facilitate the levy process going forward.
In another positive aspect of our first full year of operation, the financial services industry has responded to CIFO’s creation in several important ways: • Attendance and engagement at our outreach events arranged in conjunction with industry bodies in both Guernsey and Jersey. While we welcome all the interest from individual financial service providers seeking to engage with our office, we have limited capacity for such non-complaint-related activity. We therefore endeavour wherever possible to arrange outreach events through industry bodies to maximise the use of staff time and to efficiently share the information as broadly as possible amongst industry stakeholders. • Sharing information with their customers about CIFO and the ability to refer unresolved complaints to our office. • Engagement with our team to resolve complaints constructively and as quickly as possible. • Working with our team at an early stage to achieve quick resolutions through mediation rather than insisting on formal determinations. This greatly increased our efficiency and enabled us to tackle far more complaints than otherwise would have been possible with our limited resources during the initial period. Throughout our first full calendar year, we continued to work with our colleagues engaged in regulation in both Guernsey and Jersey, and occasionally beyond the Channel Islands. Through the sharing of information and cooperation on specific matters, we seek to assist them in their important work and obtain their assistance to enhance our ability to fairly and efficiency perform our unique dispute resolution function. We are also developing relationships with law enforcement. We plan to continue to nurture
these close working relationships for mutual benefit and thank all of our colleagues for their assistance during our start-up phase. CIFO’s independence is the key enabler which makes it possible to work between the economic power of industry and the interests of individual consumers to achieve fair outcomes to unresolved complaints. Our independence is vigorously protected by CIFO’s Chairman and the other Directors. We are grateful for their oversight and guidance. CIFO staff and all stakeholders benefit greatly from their collective experience in dispute resolution, regulatory and public policy, financial and legal affairs, and board governance. They also bring the local perspectives of Guernsey and Jersey so critical to the effective creation and sustaining of a pan-island institution. In their roles, they hold the CIFO team accountable for our effective and efficient performance of this important public interest mandate. They are also strong advocates for fair and effective dispute resolution which benefits consumers, financial service providers, and the reputation of the Channel Islands. To our staff, I note that we have had a fascinating first year together as we have endeavoured to combine building the infrastructure of our new office with simultaneously resolving a large number of consumer complaints that found their way to us. It has been a challenging year but the team can be justly proud of our progress. We look forward to continuing to lay the foundation for our work while continuing to bring to both parties a fairness of outcome through the application of a fair process; a tough job that the CIFO team has taken on with great commitment, energy and integrity. For that they deserve our heartfelt thanks. Well done.
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Channel Islands Financial Ombudsman WHO WE ARE
The Channel Islands Financial Ombudsman (CIFO) is the independent dispute-resolution service for unresolved complaints involving financial services provided in or from the Channel Islands of Jersey, Guernsey, Alderney and Sark. Complaints can be brought by any individual consumers and small businesses from anywhere in the world, plus certain Channel Islands charities. CIFO is a joint operation of two statutory ombudsman roles, established in law by the Financial Services Ombudsman (Jersey) Law 2014 and the Financial Services Ombudsman (Bailiwick of Guernsey) Law 2014, jointly operating under the name Channel Islands Financial Ombudsman. CIFO operates from a single office in Jersey with one set of staff and the same Board members overseeing the two statutory roles. The States of Jersey and States of Guernsey jointly appointed the Board of Directors and the Board appointed the Principal Ombudsman and Chief Executive. The office commenced operation on 16 November 2015.
The primary role of CIFO is to resolve complaints about financial services provided in or from the Channel Islands. It resolves complaints against financial services providers – independently, fairly, effectively, promptly, with minimum formality and so as to offer a more accessible alternative to court proceedings. This helps to underpin confidence in the finance sectors of Jersey and Guernsey, both locally and internationally.
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Channel Islands Financial Ombudsman HOW WE WORK
Douglas Melville Principal Ombudsman & Chief Executive Sophie Watkins Manager, Administration & Stakeholder Relations George Butler Financial Accountant
OUR STAFF Our staff – with a wide variety of experience and training in financial services, law, finance, consumer research and policy, dispute resolution and regulatory compliance – review and investigate unresolved complaints about financial services providers (FSPs) in or from the Channel Islands.
Dominic Hind Case Handler Richard Langlois Case Handler Ross Symes Case Handler Heather Rushton Administration Officer
OUR APPROACH When we receive a complaint, our team looks at the information provided to make sure it falls within our remit (see our process on page 13). For instance, the FSP has to fall within CIFO’s remit as set out by law in both Jersey and Guernsey. A summary of CIFO’s remit is set out in the table on page 11. We also look for a final answer from the FSP to the consumer, which allows us to start our review knowing the positions of both parties. During an investigation, we gather information from both parties and review the facts of the case. We make decisions based on what’s fair to both the consumer and the FSP, taking into account general principles of good financial services and business practices, the law, regulatory policies and guidance, and any applicable professional body, standards, codes of practice, or codes of conduct. If we believe that the facts of the case do not warrant further review, we will let the consumer know quickly. We always make sure that we explain our reasons, just as we do when we are determining that compensation is appropriate. If we determine that compensation is owed to the consumer, we try to resolve the dispute through a facilitated settlement between the consumer and FSP that aims to address the complaint quickly with a fair outcome to both parties.
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PRINCIPAL OMBUDSMAN & STAFF
Left to right: Ross Symes, Douglas Melville, Sophie Watkins, George Butler, Heather Rushton, Richard Langlois, Dominic Hind.
If we are unable to facilitate a settlement but we continue to believe the consumer should be compensated, we will complete our investigation and make a determination. Our decision, if accepted by the consumer, becomes binding upon the FSP. We can require that FSPs pay compensation to the consumer of up to £150,000. We may also determine that compensation for inconvenience is appropriate in the specific circumstances. In some instances, non-financial actions such as correcting a full calendar year record may be appropriate. Neither a court nor a regulator, CIFO does not fine or discipline FSPs or individuals working within the financial sector. While we do not handle matters that have already been through a court or an arbitration, if a client does not accept our conclusions, they are free to pursue their case through other processes including the legal system, subject to statutory limitation periods.
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OUR MANDATE The scope or mandate of the Channel Islands Financial Ombudsman is set in the primary laws and supporting secondary legislation in Jersey and the Bailiwick of Guernsey. CIFO can only investigate complaints that meet certain conditions relating to the person bringing the complaint, the type of financial service complained about and the timing conditions. The table on the following page summarises the mandate according to the location from where the financial services were provided. Please note that this is a summary and the full detail is provided in the legislation viewable on our website.
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Service provided in / from
Guernsey, Alderney and Sark
Complainants
1. Must be a consumer or microenterprise (anywhere in the world) or a Channel Islands small charity;
Jersey
2. Must not be a financial services provider; 3. Must have been a client or had another specified relationship with the financial services provider.
Financial Services
The complaint must relate to an action (or failure to act) by a person while carrying out relevant financial services business, in or from within the location. Relevant financial services business covers: 1. Banking 2. Money service business 3. Insurance, excepting commercial reinsurance;
3. Insurance;
4. Investment funds: activities relating only to Class A collective investment schemes and not other collective investment schemes;
4. Investment funds: activities relating only to recognized funds and not other collective or alternative investment funds;
5. Investment services such as advising, managing or dealing in Class A funds and other investments such as stocks and shares;
5. Investment services such as advising, managing or dealing in collective investment funds and other investments such as stocks and shares;
6. Pensions. Exemption for pension business carried on in relation to an occupational pension scheme, where the employer does not do any other pensions business;
6. Pensions. Exemption for pension business carried on by employers in relation to their occupational pension schemes, where the employer does not do any other pensions business;
7. Credit. Exclusions for informal store credit; debt-advice from a third party such as the Citizens Advice Bureau; point-of-sale credit intermediaries that are not financial services entities; 8. Related (or ancillary) services provided by the same financial services provider; 9. Providing advice or introductions to the areas above. Fiduciary / trust company business is exempt unless it relates to one of the areas above
Timing
1. ‘Starting point’: the act or omission that led to the complaint must not be before 2 July 2013;
1. Starting point’: the act or omission that led to the complaint must not be before 1 January 2010;
2. The financial services provider must have already had a reasonable opportunity to resolve the complaint (a maximum of 3 months); 3. The complainant must refer the complaint to CIFO by the later of: a. 6 years from the act/omission; or b. 2 years after complainant should have known he/she had reason to complain 4. The complainant must also refer the complaint to CIFO within 6 months of receiving the financial services provider’s decision on the complaint if the financial services provider met certain conditions in handling the complaint.
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A SUMMARY OF HOW WE DETERMINE IF A COMPLAINT IS WITHIN CIFO’S MANDATE
Were the financial services provided in or from Jersey, Guernsey, Alderney or Sark?
NO
CIFO will not be able to investigate
YES
Are the financial services provided within CIFO’s remit?
NO
CIFO will not be able to investigate
NO
CIFO will not be able to investigate
NO
CIFO will not be able to investigate
YES
Are the timing conditions satisfied?
YES
Is the complainant eligible?
YES
CIFO will investigate further 12
THE PROCESS FROM ENQUIRY THROUGH TO FINAL DETERMINATION AND BEYOND
Enquiry
Mediation
Investigation
Market Conduct Change
Receipt of Complaint
Initial Review Against Mandate
Information Gathering
Complaint Intake Process
Preliminary Determination
Final Determination
Feedback to Industry and Regulator
Court Enforcement of Decision (if required)
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YEAR IN REVIEW 2016
OPERATIONS CIFO’s first full calendar year of operation provided numerous indications of what the future may hold for this new and unique mandate. Our small team met the challenges of higher than expected complaint volumes while continuing to establish the infrastructure, policies and procedures that support the day-to-day core function of resolving financial sector disputes. The volume of complaints experienced by the office (1,293 in 2016) was almost double the annual volume of 700 predicted during the planning phase of CIFO’s creation. This was offset by the high proportion of complaints that were found to fall outside of CIFO’s remit due to statutory date bars or excluded financial services business. Given the inability to accurately predict the volume of complaints, and not wanting to commit to additional staff in case the initial complaint volumes were a temporary spike, it was decided to delay adding case handler capacity until it was clear whether the initial complaint volumes seen at the beginning of operation at the end of 2015 would continue. Complaint volumes continued above plan through 2016 and the high volume of out of mandate complaints also required significant effort to review, confirm their status against CIFO’s remit, and explain to complainants, who were at times highly engaged, why their complaint could not be reviewed under CIFO’s remit. These operating pressures resulted in an increase in case file inventory and completion times that were slower than desired by both CIFO and the parties to the complaints. One of the other impacts of higher complaint volumes and constrained capacity was the inability to dedicate sufficient effort to non-case file work related to sharing of learnings from complaints handled by CIFO. This includes the preparation of case studies and root cause analysis. By the end of 2016, the decision was taken to increase case handler capacity by 50% with the addition of a third case handler who joined the team at the beginning of 2017. One unexpected aspect of the complaints seen in 2016 was the experience of multiple complaints arising from a single financial service provider involving a single product or issue. Some of these multiple complaints were found to be out of mandate while others represented a significant proportion of CIFO’s case file work during the year. The operational impact of these multiple complaints was somewhat counter-intuitive. The workload per case file was not lessened by the multiple nature of the complaints. Indeed, it can be increased. The implications of multiple complaints for the solvency of the financial service provider, the availability of redress through professional indemnity-type insurance, or other sources of funds for redress, can all become a significant issue. A final determination awarding compensation is of little utility to an aggrieved consumer if there are no funds available to pay the compensation. POLICY ISSUES ARISING CIFO's complaint reviews can be expected to surface policy issues about the financial services industry and CIFO's remit. These issues will be brought to the attention of CIFO's Board of Directors, the regulators, and the States of Guernsey and States of Jersey as appropriate.
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One such issue is that in a dynamic financial sector, businesses are being created, merged, and dissolved. Customers may move their accounts between financial service providers. Financial sector professionals can move between employers and bring their clients along with them. All of this creates a complex system for determining which financial service provider should be responsible for problems that arise or continue over a period of years. We encountered numerous complaints where it was necessary to allocate responsibility between financial service providers for the same loss. In other situations, we sought assistance from financial service providers who were not the subject of a customer complaint but had customer or product information in their possession important to the review of the complaint. These situations exposed limitations in the powers of CIFO to ensure cooperation by financial services providers that held relevant information but were not a party to the complaint. STAKEHOLDER OUTREACH During CIFO’s first full calendar year of operation, it was important to get out into the community to engage with stakeholders and to help them understand what CIFO is, and sometimes more importantly what CIFO is not. CIFO staff participated in dozens of meetings through the year with governments, regulators, industry groups, consumer and community groups, and the media. All stakeholders have a role to play in making customers aware of the ability to refer an unresolved complaint to our office. It also helps to build support for effective complaint handling both within financial services providers and through CIFO as required. As a more formal expression of CIFO’s commitment to transparency, in July 2016 we convened public annual meetings in Guernsey and in Jersey to present our 2015 annual report and audited financial statements. These were also an opportunity for the public to address questions directly to the Board of Directors and management. FUNDING The initial start-up funding for CIFO was provided through lines of credit provided by the States of Guernsey and States of Jersey. Both loans were repaid at the end of Q1 of 2016 once the levy schemes were in place to obtain funding directly from financial service providers in Guernsey and Jersey. 15
To guide the development of the levy schemes for the initial period of CIFO's operation, the initial funding structure for CIFO was agreed between the States of Guernsey and States of Jersey. It set out that the operating costs for the combined operation should be allocated equally to the States of Guernsey and States of Jersey for an initial period until complaint volume data could be accumulated to support a discussion of alternate funding structures. In late 2016, this initial funding structure was extended by the States of Guernsey and Jersey through to the end of 2018 to reflect the fact that less than a year of complaint data had been accumulated, considered insufficient to form the basis for discussion of a new funding structure for CIFO. In any financial Ombudsman scheme, one of the biggest challenges is to develop a funding structure that reflects the unique nature of the local market and the legitimate concerns of industry stakeholders. CIFO experienced this challenge in connection with the Guernsey investment sector where the categories of financial services provider subject to CIFO’s mandate and liable to pay the annual levy did not align to the categories of regulated entities in Guernsey. It took an extra round of communication with industry in early 2016 and several months to clarify the Guernsey investment sector providers subject to the levy. The cooperation and patience of the Guernsey investment sector during this challenging process was appreciated. OFFICE INFRASTRUCTURE DEVELOPMENT CIFO undertook two major office infrastructure projects in 2016. The first was to create a finance function to bring in-house functions such as book-keeping, reporting, payroll and the billing and collection of levies and case fees that had previously been outsourced. The in-house function will replace the outsourced activities from the start of 2017 and will also support statistical and financial analysis relating to CIFO’s complaint handling activities. The second project involved the acquisition, modification, testing, and deployment of a new complaint management system (CMS) to handle CIFO’s complaint handling, workflow and reporting. CIFO is grateful to the Ombudsman for Banking Services and Investments (OBSI) in Canada for their generosity in providing CIFO with the code and documentation from their newly-developed CMS. This enabled CIFO to build from a well-designed base system thereby saving our team significant cost, time and effort. The system went live on 1 January, 2017.
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LOOKING AHEAD TO 2017 In many ways, 2017 will be an extension of the work we started during 2016. Investing in our team through training and development focused on mediation skills. Investing in our office infrastructure by refining our new complaint management system (CMS). Clarifying our approach for all stakeholders by refining, documenting and communicating our processes for resolving complaints and publishing case studies to inform industry and the general public about complaint issues we see affecting financial consumers. Building on the success of our working relationships with regulators in both Guernsey and Jersey, we will finalise arrangements with law enforcement in both Guernsey and Jersey to enable information exchange to support each other’s mandates. We will engage in extensive consultation with industry stakeholders to hear their concerns and ideas and begin the process to identify a long-term funding structure for CIFO to become effective from 1 January 2019. Discussions through 2017 will focus on identifying a principles-based approach that is fair and practical. In 2018, the stakeholder discussions will continue, informed by two full years of island-specific complaint volume data which CIFO will begin publishing in Q1 of 2018. At the end of 2017, the initial period of acclimatisation to CIFO’s new mandate will come to an end. Final determinations made from 1 January 2018 onward will identify the financial service provider concerned, with similar changes to published complaint volume data beginning in Q1 2018. 2017 will therefore be the final year for financial service providers to refine their internal complaint handling and become accustomed to mediated resolutions with CIFO before the commencement of the new reporting will place into the public domain CIFO’s complaint experience with each financial service provider. In addition, complaint statistics will distinguish between complaints about Jersey and Guernsey providers starting in Q1 2018. 17
COMPLAINT STATISTICS 2016
This presentation of CIFO’s complaint statistics represents the first full calendar year of operation for the new office and supplements the quarterly complaint statistics regularly published by CIFO on our website. CIFO commenced operation on 16 November 2015, about six weeks before the end of CIFO’s 2015 fiscal year. None of the 87 complaints received and opened up to 31 December 2015 became case files in 2015. As a result, the 2016 complaint statistics reflect all of the closed case files since CIFO’s commencement of operations. The volume of complaints received by CIFO in 2016 was significantly higher than the volumes predicted during the planning for the new office. Partially off-setting this higher complaint volume was a significantly higher proportion of complaints which were found to be out of mandate given the limitations placed on CIFO’s remit by Jersey and Guernsey legislation. The complaint statistics are presented for the Channel Islands on a consolidated basis. Island-specific quarterly complaint data will be reported commencing in Q1 of 2018 and annual statistics in next year’s 2017 Annual Report. Compared with the quarterly statistics published for 2016, data have been updated as classification of a complaint can change during its life cycle and there is an ongoing effort made to review and refine the accuracy of complaint data which can lead to minor post-period adjustments.
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2016 COMPLAINT STATISTICS SUMMARY 2016 Stage 2 Complaints Received
2016 Stage 1 Enquiries
483
1,293
Stage 3 Initial Review as at 31 Dec 2016
9 112 Awaiting customer documents/ consent
Rejected as out of mandate
Total Rejections as out of mandate
Complaints under initial review
Appears within mandate
963
Stage 4 FSP Document Request as at 31 Dec 2016
1
7
Waiting for documents from FSP
Rejected as out of mandate
Pending further review against remit
Within mandate
Case Fee Payable
Stage 5 Open Case Files as at 31 Dec 2016 (117)
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65
Under 30 days
10
30-60
24
61-90
Over 90
Closed Case Files (149)
80 Mediated
30 Decided
39 Withdrawn
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2016 COMPLAINT STATISTICS ANALYSIS Complaints Received - Location from where the financial services were provided Channel Islands UK Other Total
1,276
99%
15
1%
2
0%
1,293
100%
This section of the 2016 Statistics Analysis provides detailed information concerning complaints, which are all customer expressions of dissatisfaction about a financial services provider that have been received by CIFO whether or not they are ultimately deemed to fall within CIFO’s mandate. Of the 1,293 complaints received by CIFO in 2016, 1,276 (99%) were against financial services providers operating in or from within the Channel Islands. 1.5% (15) operated in or from within the UK, and 2 operated elsewhere. When CIFO receives a complaint against a financial services provider operating outside of the Channel Islands, it will be referred to the most appropriate financial ombudsman service or regulator within that jurisdiction.
Complaints Received - Location of Complainants
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Channel Islands
334
26%
UK
150
12%
Other
809
62%
Total
1,293
100%
Of the 1,293 complaints received by CIFO in 2016, 809 (62%) were from complainants residing outside of both the Channel Islands and the UK. 334 (26%) were from Channel Island residents and 150 (12%) were from UK residents.
Complaints Received - Sector of Business Activity Investment/Funds
577
44%
Trust/Fiduciary
346
27%
Banking
178
14%
Insurance
115
9%
Pensions
35
3%
Non-Bank Money Services/Credit
24
2%
Not Financial Services-Related
18
1%
1,293
100%
Total
Of the 1,293 complaints received by CIFO in 2016, the majority were about the financial sub-sectors of investments/ funds and trust/fiduciary. 577 (44%) were about investments/funds and 346 (27%) were about trust/fiduciary. Of the remaining complaints, 178 (14%) were about banking, 115 (9%) were about insurance, 35 (3%) were about pensions, 24 (2%) were about non-bank money services and credit, and 18% (1%) were not financial services-related.
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Case Files Opened - Complainant Location Channel Islands
127
55%
UK
46
20%
Other
57
25%
230
100%
Total
This section of the 2016 Statistics Analysis provides detailed information concerning case files. A case file is any complaint which has passed the preliminary review against CIFO’s remit and an investigation has commenced. Of the 230 case files opened by CIFO in 2016, 127 (55%) involved a complainant from the Channel Islands, 46 (20%) involved a UK resident, and 57 (25%) involved a complainant resident elsewhere.
Case Files Opened - Sector of Business Activity Investment/Funds
102
44%
Banking
79
34%
Insurance
31
14%
Pensions
10
4%
8
4%
230
100%
Non-Bank Money Services/Credit Total
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Of the 230 case files opened by CIFO in 2016, 102 (44%) related to the investment/fund sub-sectors, 79 (34%) related to the banking sub-sector, 31 (14%) related to the insurance subsector, 10 (4%) related to the pensions sub-sector, and 8 (4%) related to the non-bank money services and credit sub-sectors.
Case Files Opened- Product Areas Financial Advice
81
36%
Current Account
53
24%
Mortgage
13
6%
Other investments
12
5%
Money Transfer
11
5%
Health Insurance
10
4%
Whole of life insurance (Investment)
7
3%
Mutual funds, unit trusts, collective investment schemes
6
3%
Home Insurance
6
3%
Private Pension Product
5
2%
International Pension Scheme
5
2%
Payment Protection
4
2%
Stocks and Shares
3
1%
Overdraft facility on current account
3
1%
Savings/Deposit Account
2
1%
Consumer Loan
2
1%
Automobile/vehicle Insurance
2
1%
Travel Insurance
1
0%
Legal Insurance
1
0%
Hire Purchase Agreement
1
0%
Debt Collection
1
0%
Contents Insurance
1
0%
230
100%
Total
Over a third of case files (36%) opened by CIFO in 2016 related to financial advice as the product or service. Current accounts were the second most common product or service, with 53 (24%) case files. Case file volumes involving other product areas were considerably lower.
23
Case Files Opened - Issue Mis-selling
99
43%
Poor administration or delay
47
21%
Closure of account
24
11%
Non-payment of claim
22
10%
Fees/Charges
16
7%
Refusal of service
12
5%
Disputed payment out
7
3%
Transaction
1
0%
Interest charged/paid
1
0%
Enforcement/collection
1
0%
230
100%
Total
24
The most common issue in case files opened by CIFO in 2016 was mis-selling or unsuitable investment recommendations, with 99 (43%) cases. The second most common issue was poor administration or delays, with 47 (21%) cases. This was followed by account closures with 24 (11%) related cases, and the non-payment of insurance claims with 22 (10%) cases.
Percentage of cases resolved by days taken from receipt of FSP file Percentage of cases resolved by days taken
Mediated
Determined
Total
27%
3%
21%
30-60
9%
3%
7%
60-90
43%
24%
37%
>90
21%
70%
35%
100%
100%
100%
